Exhibit 1.1
SEABRIGHT INSURANCE HOLDINGS, INC.
6,400,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January 26, 2006
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXXX & CO.
XXXXX, XXXXXXXX & XXXXX, INC.
XXXXXXX, XXXXXXX & CO.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
SeaBright Insurance Holdings, Inc., a Delaware corporation (the
"Company"), and certain stockholders of the Company listed on Schedule I
hereto (the "Selling Stockholders"), each confirms its agreement with each
of the Underwriters listed on Schedule II hereto (collectively the
"Underwriters"), for whom Friedman, Billings, Xxxxxx & Co., Inc., Xxxxx
Xxxxxxx & Co., Xxxxx, Xxxxxxxx & Xxxxx, Inc. and Xxxxxxx, Xxxxxxx & Co. are
acting as Representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company and the Selling Stockholders of an
aggregate 6,400,000 shares of Common Stock, par value $0.01 per share, of
the Company ("Common Stock") in the respective numbers of shares set forth
opposite the names of the Company and each such Selling Stockholder in
Schedule I hereto (the "Initial Shares"), and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto, and (ii) the grant of the option described in Section
1(b) hereof to purchase all or any part of 960,000 additional shares of
Common Stock to cover over-allotments, if any, from the Company and the
Selling Stockholders, in the respective numbers of shares of Common Stock
set forth opposite the names of the Company and the Selling Stockholders in
Schedule I hereto (the "Option Shares"), to the Underwriters, acting
severally and not jointly, in the respective numbers of shares of Common
Stock set forth opposite the names of the Underwriters in Schedule II
hereto. The Initial Shares and all or any part of the Option Shares of
Common Stock subject to the option described in Section l(b) hereof are
hereinafter called, collectively, the "Shares."
The Company understands that the Underwriters propose to make a
public offering of the Shares as soon as the Underwriters deem advisable
after this Underwriting Agreement (the "Agreement") has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission"), a registration statement on Form S-1 (No. 333-130902)
and a related preliminary prospectus for the registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder (the "Securities Act Regulations").
The Company has prepared and filed such amendments to the registration
statement and such amendments or supplements to the related preliminary
prospectus as may have been required to the date hereof, and will file such
additional amendments or supplements as may hereafter be required. The
registration statement has been declared effective under the Securities Act
by the Commission. The registration statement, as amended at the time it
was declared effective by the Commission (and, if the Company files a
post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), such registration
statement as so amended) and including all information deemed to be a part
of the registration statement pursuant to incorporation by reference, Rule
430A of the Securities Act Regulations or otherwise, is hereinafter called
the "Registration Statement." Any registration statement filed pursuant to
Rule 462(b) of the Securities Act Regulations is hereinafter called the
"Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration
Statement. The preliminary prospectus dated January 17, 2006 relating to
the Shares, as filed with the Commission and as amended and supplemented
prior to the date of the Prospectus, is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first
filed with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto.
The Commission has not issued any order preventing or suspending
the use of the Preliminary Prospectus.
The term "Disclosure Package" means (i) the Preliminary
Prospectus, as most recently amended or supplemented immediately prior to
the Initial Sale Time (as defined herein), (ii) the Issuer Free Writing
Prospectuses (as defined below), if any, identified in Schedule III hereto,
and (iii) any other Free Writing Prospectus (as defined below) that the
parties hereto shall hereafter expressly agree to treat as part of the
Disclosure Package.
The term "Issuer Free Writing Prospectus" means any issuer free
writing prospectus, as defined in Rule 433 of the Securities Act
Regulations. The term "Free Writing Prospectus" means any free writing
prospectus, as defined in Rule 405 of the Securities Act Regulations.
The Company, each of the Selling Stockholders and the
Underwriters (as applicable) agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and representations
and other terms and conditions herein set forth, at the purchase price per
share of Common Stock of
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$_____, the Company and the Selling Stockholders, severally and not
jointly, agree to sell to the Underwriters the Initial Shares as set forth
on Schedule I opposite such party's name, and each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholders the number of Initial Shares set forth in Schedule II opposite
such Underwriter's name, plus any additional number of Initial Shares which
such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof, subject in each case, to such adjustments
among the Underwriters as the Representatives in their sole discretion
shall make to eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the
purchase price per share of Common Stock set forth in paragraph (a) above,
the Company and each Selling Stockholder, severally and not jointly, hereby
grants an option to the Underwriters, acting severally and not jointly, to
purchase all or any part of the Option Shares as set forth on Schedule I
opposite such party's name, plus any additional number of Option Shares
which each such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof. The option hereby granted will expire
30 days after the date hereof and may be exercised in whole or in part from
time to time within such 30-day period only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to
the Company and the Selling Stockholders setting forth the number of Option
Shares as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Shares. Any
such time and date of delivery (an "Option Closing Time") shall be
determined by the Representatives, but shall not be later than three full
business days (or earlier than two full business days, without the consent
of the Company and the Selling Stockholders) after the exercise of such
option, nor in any event prior to the Closing Time, as hereinafter defined.
If the option is exercised as to all or any portion of the Option Shares,
the Company and each Selling Stockholder will sell that number of Option
Shares then being purchased and each of the Underwriters, acting severally
and not jointly, will purchase the number of Option Shares that bear the
same proportion to the total number of Option Shares then being purchased
as the number of Initial Shares set forth in Schedule I opposite the name
of the Company or such Selling Stockholder bears to the total number of
Initial Shares, and each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of Option Shares
then being purchased which the number of Initial Shares set forth in
Schedule II opposite the name of such Underwriter bears to the total number
of Initial Shares, subject in each case to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Initial Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as
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the Representatives may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholders shall be delivered by or
on behalf of the Company and the Selling Stockholders to the
Representatives, including, at the option of the Representatives, through
the facilities of The Depository Trust Company (the "DTC") for the account
of such Underwriters against payment by or on behalf of such Underwriters
of the purchase price therefor by wire transfer of federal (same-day) funds
to the account specified to the Representatives by the Company and each of
the Selling Stockholders upon at least forty-eight hours' prior notice. The
Company will cause the certificates representing the Initial Shares to be
made available for checking and packaging not later than 1:00 p.m. New York
City time on the business day prior to the Closing Time (as defined below)
with respect thereto at the office of the Representatives, 0000 00xx Xxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at the office of DTC or its designated
custodian, as the case may be (the "Designated Office"). The time and date
of such delivery and payment shall be 9:30 a.m., New York City time, on the
third (fourth, if the determination of the purchase price of the Initial
Shares occurs after 4:00 p.m., New York City time) business day after the
date hereof (unless another time and date shall be agreed to by the
Representatives, the Selling Stockholders and the Company). The time and
date at which such delivery and payment are actually made is hereinafter
called the "Closing Time." The closing shall take place at the offices of
Lord, Bissell & Brook LLP, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
or such other place as the Company and the Representatives may agree.
(b) Option Shares. Any Option Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company and the Selling Stockholders
shall be delivered by or on behalf of the Company and the Selling
Stockholders to the Representatives, including, at the option of the
Representatives, through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
respective accounts specified to the Representatives by the Company and
each of the Selling Stockholders, upon at least forty-eight hours' prior
notice. The Company will cause the certificates representing the Option
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Option Closing Time with respect thereto at the
Designated Office. The time and date of such delivery and payment shall be
9:30 a.m., New York City time, on the date specified by the Representatives
in the notice given by the Representatives to the Company and the Selling
Stockholders of the Underwriters' election to purchase such Option Shares
or on such other time and date as the Company, the Selling Stockholders and
the Representatives may agree upon in writing.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters as of the date
hereof, the Initial Sale Time (as defined below), as of the Closing Time
and as of any Option Closing Time (if any), and agrees with each
Underwriter, that:
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(a) the Company has an authorized capitalization as set forth both in the
Prospectus and the Disclosure Package; the outstanding shares of capital
stock of the Company and each subsidiary of the Company (each, a
"Subsidiary") have been duly and validly authorized and issued and are
fully paid and non-assessable, and all of the outstanding shares of capital
stock of the Subsidiaries are directly or indirectly owned of record and
beneficially by the Company; except as disclosed in both the Prospectus and
the Disclosure Package, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such Subsidiary,
(ii) warrants, rights or options to subscribe for or purchase from the
Company or any such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations
of the Company or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations, or any such
warrants, rights or options; the description of the Company's stock option
and stock purchase plans and the options or other rights granted and
exercised thereunder set forth in the Prospectus accurately and fairly
presents in all material respects the information required by the
Securities Act and the Securities Act Regulations to be shown with respect
to such plans, options and rights;
(b) each of the Company and the Subsidiaries (all of which are named in
Exhibit 21 to the Registration Statement) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and
authority to own its respective properties and to conduct its respective
businesses as described in each of the Registration Statement, the
Prospectus and the Disclosure Package, and, in the case of the Company, to
execute and deliver this Agreement and to consummate the transactions
contemplated herein;
(c) each of the Company and the Subsidiaries is duly qualified or licensed
and is in good standing in each jurisdiction in which it conducts its
respective business or in which it owns or leases real property or
otherwise maintains an office and in which the failure, individually or in
the aggregate, to be so qualified or licensed would not reasonably be
expected to have a material adverse effect on the assets, business,
operations, earnings or condition (financial or otherwise) of the Company
and the Subsidiaries taken as a whole (any such effect or change, where the
context so requires, is hereinafter called a "Material Adverse Effect" or
"Material Adverse Change"); each Subsidiary holds such licenses,
certificates, permits, consents, orders, approvals and other authorizations
from governmental authorities (including, without limitation, from the
insurance regulatory agencies of the various jurisdictions where it
conducts business) ("Permits") and has made all necessary filings required
under any federal, state or local law, regulation or rule and has obtained
all necessary authorizations, consents and approvals from other persons
required in order to conduct its respective business as described in both
the Prospectus and the Disclosure Package, except where the failure to hold
any such Permit or make such filings required under any federal, state or
local law, regulation or rule or obtain such authorizations, consents and
approvals from other persons would not reasonably be expected to result in
a Material Adverse Effect; each such Permit is valid and in full force and
effect, except where the failure of such Permit to be valid or in full
force and effect
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would not reasonably be expected to have a Material Adverse Effect; neither
the Company nor any of the Subsidiaries is in violation of, in default
under, or has received any written notice regarding or alleging a violation
of or default under or revocation of any Permit or a violation of any
federal, state or local law, regulation or rule or any decree, order or
judgment applicable to the Company or any of the Subsidiaries the effect of
which, in each case, would reasonably be expected to result in a Material
Adverse Effect; except as disclosed in both the Prospectus and the
Disclosure Package, the authority of each Subsidiary to write or produce
the classes and lines of insurance authorized by such Permit is
unrestricted and no such Permit contains a materially burdensome
restriction that is not adequately disclosed in both the Prospectus and the
Disclosure Package; neither the Company nor any of the Subsidiaries is a
party to any agreement, formal or informal, with any regulatory official or
other person limiting the ability of the Company or any Subsidiary of the
Company from making full use of the Permits issued to it; except as
disclosed in both the Prospectus and the Disclosure Package, no Subsidiary
is prohibited or restricted, directly or indirectly, from paying dividends
to the Company, or from making any other distribution with respect to such
Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any
loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or assets
to the Company or to any other Subsidiary; other than as disclosed in both
the Prospectus and the Disclosure Package, the Company does not own,
directly or indirectly, more than 5% of any capital stock or other equity
securities of any other corporation or any ownership interest of more than
5% in any partnership, joint venture or other association;
(d) the Company and each Subsidiary is in compliance with all applicable
laws, rules, regulations, orders, decrees and judgments, including those
relating to transactions with affiliates, except where such non-compliance,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect;
(e) except as disclosed in both the Prospectus and the Disclosure Package,
the Company and SeaBright Insurance Company ("SBIC") have made no material
change in their insurance reserving practices since December 31, 2004;
(f) all reinsurance treaties and arrangements to which the Company or any
Subsidiary is a party are in full force and effect and neither the Company
nor any Subsidiary is in violation of, or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained therein, except where the failure of such reinsurance
treaties and arrangements to be in full force and effect or where such
violation or default would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; neither the
Company nor any Subsidiary has received any written notice from any of the
other parties to such treaties, contracts or agreements, or otherwise has
knowledge, that such other party will be unable to perform such treaty or
arrangement except to the extent adequately and properly reserved for in
the audited historical financial statements of the Company included in both
the Prospectus and the
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Disclosure Package, except where such nonperformance would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect;
(g) the statutory financial statements of SBIC from which certain ratios
and other statistical data filed as part of the Registration Statement, the
Prospectus and the Disclosure Package have been derived have been prepared
for each relevant period in conformity with statutory accounting principles
or practices required or permitted by the National Association of Insurance
Commissioners, the Illinois Department of Financial and Professional
Regulation - Division of Insurance and the California Department of
Insurance, and such statutory accounting practices have been applied on a
consistent basis throughout the periods involved, except as may otherwise
be indicated therein or in the notes thereto, and present fairly in all
material respects the statutory financial position of SBIC as of the dates
thereof, and the statutory basis results of operations of SBIC for the
periods covered thereby;
(h) neither the Company nor any Subsidiary is in breach of or in default
under (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default under), its respective
organizational documents, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company or any Subsidiary is a party
or by which any of them or their respective properties is bound, except for
such breaches or defaults which would not have a Material Adverse Effect;
(i) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not conflict
with, or result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under): (i) any provision of the
organizational documents of the Company or any Subsidiary, (ii) any
provision of any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Company or
any Subsidiary is a party or by which any of them or their respective
properties may be bound or affected, (iii) any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable
to the Company or any Subsidiary, or (iv) result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or
asset of the Company or the Subsidiaries; except in the case of clause
(ii), (iii) and (iv) for such breaches, defaults, liens, charges, claims or
encumbrances that would not reasonably be expected to have a Material
Adverse Effect;
(j) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles,
and except to the extent that the indemnification and contribution
provisions of Section 11 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
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(k) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required to be obtained by the Company or any of its
Subsidiaries in connection with the Company's execution, delivery and
performance of this Agreement, its consummation of the transactions
contemplated herein, and its sale and delivery of the Shares, other than
(A) such as have been obtained, or will have been obtained at the Closing
Time or the relevant Option Closing Time, as the case may be, under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (B) such approvals as have been obtained in connection
with the approval of the listing of the Shares on the Nasdaq National
Market and (C) any necessary qualifications under the securities or blue
sky laws of the various jurisdictions in which the Shares are being offered
by the Underwriters;
(l) the Registration Statement has become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under
the Securities Act and no proceedings for that purpose have been instituted
or are pending or, to the knowledge of the Company are threatened by the
Commission, and the Company has complied to the Commission's satisfaction
with any request on the part of the Commission for additional information;
(m) the Preliminary Prospectus when filed and the Registration Statement as
of each effective date and as of the date hereof complied or will comply,
and the Prospectus and any further amendments or supplements to the
Registration Statement, the Preliminary Prospectus or the Prospectus will,
when they become effective or are filed with the Commission, as the case
may be, comply, in all material respects with the requirements of the
Securities Act and the Securities Act Regulations;
(n) the Registration Statement, as of its effective date and as of the date
hereof, did not and does not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and the Preliminary
Prospectus does not, and the Prospectus or any amendment or supplement
thereto will not, as of the applicable filing date, the date hereof and at
the Closing Time and on each Option Closing Time (if any), contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty or
representation with respect to any statement contained in or omitted from
the Registration Statement, the Preliminary Prospectus or the Prospectus in
reliance upon and in conformity with the information concerning the
Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representatives to the Company expressly for use therein (that
information being limited to that described in the penultimate sentence of
the first paragraph of Section 11(c) hereof);
(o) as of the date hereof, the Company (i) is subject to the requirement to
file reports pursuant to Section 13 or Section 15(d) of the Exchange Act,
(ii) has filed all reports and other materials required to be filed by
Sections 13(a), 14 or 15(d) of the Exchange Act
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during the preceding 12 months (or for such shorter period that the Company
was required to file such reports and materials), (iii) has filed an Annual
Report on Form 10-K required under Section 13(a) or 15(d) under the
Exchange Act for its fiscal year ended December 31, 2004; (iii) is not (a)
a blank check company as defined in Rule 419(a)(2), (b) a shell company,
other than a business combination related shell company, each as defined in
Rule 405, or (c) a registrant for an offering of xxxxx stock as defined in
Rule 3a51-1 of the Exchange Act Regulations, and (iv) makes its periodic
and current reports filed pursuant to Section 13 or Section 15(d) of the
Exchange Act readily available and accessible on a web site maintained by
or for the Company and containing information about the Company; and any
further documents so filed or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
applicable, will conform in all material respects to the requirements of
the Securities Act and the Securities Act Regulations, or the Exchange Act
and the Exchange Act Regulations, as applicable, and will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(p) as of ___:00 pm (Eastern time) January 26, 2006 (the "Initial Sale
Time"), the Disclosure Package did not, and at the time of each sale of
Shares and at the Closing Time and each Option Closing Time, the Disclosure
Package will not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; as of its issue date or date of first use and at all subsequent
times through the Initial Sale Time, each Issuer Free Writing Prospectus
did not, and at the time of each sale of Shares and at the Closing Time and
each Option Closing Time, each such Issuer Free Writing Prospectus will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation
with respect to any statement contained in or omitted from the Disclosure
Package in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the
Underwriters through the Representatives to the Company expressly for use
therein (that information being limited to that described in the
penultimate sentence of the first paragraph of Section 11(c) hereof);
(q) each Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Shares did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in
the Registration Statement;
(r) the Company is eligible to use Free Writing Prospectuses in connection
with this offering pursuant to Rules 164 and 433 under the Securities Act;
any Free Writing Prospectus that the Company is required to file pursuant
to Rule 433(d) under the Securities Act Regulations has been, or will be,
filed with the Commission in accordance
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with the requirements of the Securities Act and the Securities Act
Regulations; and each Free Writing Prospectus that the Company has filed,
or is required to file, pursuant to Rule 433(d) under the Securities Act
Regulations or that was prepared by or on behalf of or used by the Company
complies or will comply in all material respects with the requirements of
the Securities Act and the Securities Act Regulations;
(s) except for the Issuer Free Writing Prospectuses identified in Schedule
III hereto, and any electronic road show relating to the public offering of
shares contemplated herein, the Company has not prepared, used or referred
to, and will not, without the prior consent of the Representatives,
prepare, use or refer to, any Free Writing Prospectus;
(t) the Preliminary Prospectus, the Prospectus and any Issuer Free Writing
Prospectuses (to the extent any such Issuer Free Writing Prospectus was
required to be filed with the Commission) delivered to the Underwriters for
use in connection with the public offering of the Shares contemplated
herein have been and will be identical to the versions of such documents
transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T or Rule 424 of the Securities Act Regulations;
(u) the Company filed the Registration Statement with the Commission before
using any Issuer Free Writing Prospectus;
(v) except as disclosed in the prospectus, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary or any of
their respective officers and directors or to which the properties, assets
or rights of any such entity are subject, at law or in equity, before or by
any federal, state, local or foreign governmental or regulatory commission,
board, body, authority, arbitral panel or agency which would reasonably be
expected to result in a judgment, decree, award or order having a Material
Adverse Effect;
(w) the consolidated financial statements of the Company and the combined
financial statements of Eagle Pacific Insurance Company, Pacific Eagle
Insurance Company and PointSure Insurance Services, Inc. (which are
collectively referred to as "Predecessor"), in each case including the
notes thereto, included in each of the Registration Statement, the
Prospectus and the Disclosure Package present fairly in all material
respects the consolidated and combined financial position of the Company
and the Predecessor, respectively, as of the dates indicated and the
consolidated and combined results of operations and changes in financial
position and cash flows of the Company and the Predecessor, respectively,
for the periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles as applied in the
United States and on a consistent basis during the periods involved and in
accordance with Regulation S-X promulgated by the Commission; the financial
statement schedules included in the Registration Statement and the amounts
in both the Prospectus and the Disclosure Package under the captions
"Prospectus Summary - Summary Financial Information," "Unaudited Pro Forma
Financial Information" and "Selected Financial Information" fairly present
the information shown therein and have been compiled on a
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basis consistent with the financial statements included in each of the
Registration Statement, the Prospectus and the Disclosure Package;
(x) KPMG LLP, whose reports on the consolidated financial statements of the
Company and the Subsidiaries are filed with the Commission as part of each
of the Registration Statement, the Prospectus and the Disclosure Package,
is and was during the periods covered by its reports, independent public
accountants as required by the Securities Act and the Securities Act
Regulations and registered with the Public Company Accounting Oversight
Board, and their appointment has been ratified by the Audit Committee of
the Company's board of directors, which is comprised entirely of
independent directors as defined under the applicable standards of the
Nasdaq Stock Market and the applicable rules and regulations of the
Commission;
(y) subsequent to the respective dates as of which information is given in
each of the Registration Statement, the Prospectus and the Disclosure
Package, and except as may be otherwise stated in such documents, there has
not been (A) any Material Adverse Change or any development that would
reasonably be expected to result in a Material Adverse Change, whether or
not arising in the ordinary course of business, (B) any transaction or
agreement in principle that is material to the Company and the Subsidiaries
taken as a whole, entered into by the Company or any of the Subsidiaries,
(C) any obligation, contingent or otherwise, directly or indirectly
incurred by the Company or any Subsidiary that is material to the Company
and Subsidiaries taken as a whole or (D) any dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock;
(z) the Shares conform in all material respects to the description thereof
contained in the Registration Statement, the Prospectus and the Disclosure
Package;
(aa) except as described in both the Prospectus and the Disclosure Package,
there are no persons with registration or other similar rights to have any
equity or debt securities, including securities which are convertible into
or exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act;
(bb) the Shares to be issued and sold by the Company have been duly
authorized and, when issued and duly delivered against payment therefor as
contemplated by this Agreement, will be validly issued, fully paid and
non-assessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim, and the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights arising by
operation of law, under the organizational documents of the Company or
under any agreement to which the Company or any Subsidiary is a party or
otherwise that is not described in the Prospectus; and no further approval
or authority of the stockholders or the board of directors of the Company
will be required for the issuance and sale of the Shares to be sold by the
Company as contemplated herein;
-11-
(cc) the Shares have been approved for listing on the Nasdaq National
Market, subject only to official notice of issuance; the Company has taken
all necessary actions to ensure that at the time Nasdaq shall have approved
the Shares for inclusion, it will be in compliance with all applicable
corporate governance requirements set forth in the NASD's Nasdaq
Marketplace Rules that are then in effect;
(dd) the Company has not taken, and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares;
(ee) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the
meaning of Article I of the By-Laws and the applicable rules of the
National Association of Securities Dealers, Inc. (the "NASD")) any member
firm of the NASD, other than certain affiliates of Summit Partners, which
hold not more than 19% of the outstanding common stock of optionsXpress
Holdings, Inc. and not more than a 7% interest in Liquidnet, Inc.;
(ff) the Company has not relied upon the Representatives or legal counsel
for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(gg) the form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements, any
applicable requirements of the organizational documents of the Company and
the requirements of the Nasdaq National Market;
(hh) neither the Company nor the Subsidiaries own any real property. The
Company and the Subsidiaries have good title to all personal property owned
by them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in both the Prospectus and the Disclosure Package, or such as
would not reasonably be expected to have a Material Adverse Effect; and any
real property and buildings held under lease by the Company or any
Subsidiary are held under valid, existing and enforceable leases, with such
exceptions as are disclosed in both the Prospectus and the Disclosure
Package or would not reasonably be expected to have a Material Adverse
Effect;
(ii) the descriptions in each of the Registration Statement, the Prospectus
and the Disclosure Package of the legal or governmental proceedings,
contracts, leases and other legal documents therein described present
fairly in all material respects the information required to be described by
the Securities Act or by the Securities Act Regulations; all agreements
between the Company or one or more of its Subsidiaries and third parties
expressly referenced in both the Prospectus and the Disclosure Package have
been duly
-12-
authorized, executed and delivered by the Company or one or more of its
Subsidiaries and are legal, valid and binding obligations of the Company or
one or more of its Subsidiaries, enforceable in accordance with their
respective terms, except where the failure of any such agreement to be duly
authorized, executed and delivered would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and by general equitable principles; such contracts are in full
force and effect on the date hereof except where the failure of any such
contracts to be in full force and effect would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and
neither the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any other party thereto, is in breach of or default under any of
such contracts, except for such breaches or defaults that would not result
in a Material Adverse Change;
(jj) the Company and each Subsidiary owns or possesses adequate licenses or
other rights to use all patents, trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to
conduct its business as described in both the Prospectus and the Disclosure
Package, and neither the Company, any Selling Stockholder nor any
Subsidiary has received notice of infringement of or conflict with (and the
Company does not know of any such infringement of or conflict with)
asserted rights of others with respect to any Intangibles which would have
a Material Adverse Effect;
(kk) (x) the Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a 15(e) under the Exchange
Act), which (i) are designed to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made known to
the Company's principal executive officer and its principal financial
officer by others within those entities, particularly during the periods in
which the periodic reports required under the Exchange Act are being
prepared, (ii) have been evaluated for effectiveness as of the end of the
last fiscal period covered by the Registration Statement, and (iii) are
effective in all material respects to perform the functions for which they
were established, and (y) the Company is not aware of (a) any significant
deficiency or material weakness in the design or operation of its internal
controls over financial reporting which are reasonably likely to adversely
affect the Company's ability to record, process, summarize and report
financial information to management and the Board of Directors, or (b) any
fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal control over
financial reporting. Since the most recent evaluation of the Company's
disclosure controls and procedures described above, there have been no
significant changes in internal control over financial reporting or in
other factors that could significantly affect internal control over
financial reporting;
(ll) the Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are
-13-
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(mm) each of the Company and the Subsidiaries has filed on a timely basis
all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof, each of which has
been true and correct in all material respects, and has paid all taxes
shown as due thereon; and no tax deficiency has been asserted against any
such entity, nor does any such entity know of any tax deficiency which is
likely to be asserted against any such entity which, if determined
adversely to any such entity, would reasonably be expected to have a
Material Adverse Effect;
(nn) each of the Company and the Subsidiaries maintains insurance (issued
by insurers of recognized financial responsibility) of the types and in the
amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in
similar businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect, it being understood that no representation is made in this
subsection (nn) as to the reinsurance obtained by the Company or the
Subsidiaries;
(oo) neither the Company nor any of the Subsidiaries is in violation, or
has received notice, of any violation with respect to any applicable
environmental, safety or similar law applicable to the business of the
Company or any of the Subsidiaries; the Company and the Subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective businesses,
and the Company and the Subsidiaries are in compliance with all terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not,
individually or in the aggregate, result in a Material Adverse Change;
(pp) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law
relating to discrimination in the hiring, promotion or pay of employees,
nor any applicable federal or state wages and hours law, nor any applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations
thereunder, the violation of any of which would reasonably be expected to
have a Material Adverse Effect;
-14-
(qq) neither the Company nor any of the Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of the
Subsidiaries has at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contributions,
in violation of law; (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or allowed by
applicable law; (iii) engaged in any transactions, maintained any bank
account or used any corporate funds except for transactions, bank accounts
and funds which have been and are reflected in the normally maintained
books and records of the Company and the Subsidiaries;
(rr) there are no outstanding loans or advances or material guarantees of
indebtedness by the Company or any of the Subsidiaries to or for the
benefit of any of the executive officers or directors of the Company or any
of the Subsidiaries or any of the members of the families of any of them;
(ss) all securities issued by the Company, any of the Subsidiaries or any
trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities
laws, (ii) the laws of the applicable jurisdiction of incorporation of the
issuing entity and, (iii) to the extent applicable to the issuing entity,
the requirements of the Nasdaq National Market;
(tt) in connection with this offering, the Company has not offered and will
not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of
the Securities Act or the Securities Act Regulations, and the Company has
not distributed and will not distribute any offering material in connection
with the offer and sale of the Shares except for the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus or the
Registration Statement;
(uu) except as otherwise contemplated by this Agreement, the Company has
not incurred any liability for any finder's fees or similar payments in
connection with the transactions herein contemplated;
(vv) no relationship, direct or indirect, exists and no transaction has
occurred between or among the Company or any of the Subsidiaries on the one
hand, and the directors, officers, stockholders, customers or suppliers of
the Company or any of the Subsidiaries on the other hand, which is required
by the Securities Act and the Securities Act Regulations to be described in
the Registration Statement and the Prospectus and which is not so
described;
(ww) neither the Company nor any of the Subsidiaries is or, after giving
effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
-15-
(xx) there are no existing or, to the knowledge of the Company, threatened
labor disputes with the employees of the Company or any of the Subsidiaries
which are likely to have individually or in the aggregate a Material
Adverse Effect; and
(yy) the Company, the Subsidiaries and any of the officers and directors of
the Company and the Subsidiaries, in their capacities as such, are, and at
the Closing Time and any Option Closing Time will be, in compliance in all
material respects with the provisions of the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations promulgated thereunder.
4. Representations and Warranties of the Selling Stockholders:
Each Selling Stockholder, severally and not jointly, represents and
warrants to the Underwriters that:
(a) such Selling Stockholder has full power and authority to enter into
this Agreement. All authorizations and consents necessary for the execution
and delivery by such Selling Stockholder of this Agreement have been given.
This Agreement has been duly authorized, executed and delivered by such
Selling Stockholder and constitutes a valid and binding agreement of such
Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof and hereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles,
and except to the extent that the indemnification and contribution
provisions of Section 11 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
(b) such Selling Stockholder now has, and at the Closing Time or the
applicable Option Closing Time will have, (i) good and marketable title to
the Shares to be sold by such Selling Stockholder hereunder, free and clear
of all liens, encumbrances and claims whatsoever (other than pursuant to
the letter of instruction ("Letter of Instruction") delivered to the
Transfer Agent with respect to the transfer of the Shares pursuant to the
offering), and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver such Shares to the
Underwriters hereunder and to comply with its other obligations hereunder;
(c) assuming each Underwriter acquires its interest in the Shares to be
sold by such Selling Shareholder without notice of any adverse claim
(within the meaning of the Uniform Commercial Code as in effect in the
State of New York (the "UCC")) and such Underwriter has paid the purchase
price for such Shares and has had such Shares credited to the securities
account of such Underwriter or a security intermediary (as defined in
Section 8-102(14) of the UCC) on behalf of such Underwriter maintained with
the Depository Trust Company, then such Underwriter will have acquired a
securities entitlement (as defined in Section 8-102(a)(17) of the UCC) to
such Shares purchased by such Underwriter and no action based on an adverse
claim to such securities credited to such account, whether framed in
conversion, replevin, constructive trust, equitable lien or other theory,
may be asserted against such Underwriter;
-16-
(d) the performance of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the
Selling Stockholder, or (ii) any provision of any license, indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which the Selling Stockholder is a party or by which it or
its properties may be bound or affected, or (iii) any federal, state, local
or foreign law, regulation or rule or any decree, judgment or order
applicable to the Selling Stockholder, solely with respect to this clause
(ii) or (iii) which would have a material adverse effect on the Selling
Stockholder; or result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or asset of the Selling Stockholder;
(e) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Selling
Stockholder's execution, delivery and performance of this Agreement, its
consummation of the transactions contemplated herein, and its sale and
delivery of the Shares, other than (i) such as have been obtained, or will
have been obtained at the Closing Time or the relevant Option Closing Time,
as the case may be, under the Securities Act and the Exchange Act, (ii)
such approvals as have been obtained in connection with the approval of the
listing of the Shares on the Nasdaq National Market and (iii) any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters;
(f) such Selling Stockholder is not prompted to sell Shares by any material
information concerning the Company which is not set forth in the
Registration Statement, the Prospectus or the Disclosure Package;
(g) all material information with respect to such Selling Stockholder
furnished by or on behalf of such Selling Stockholder in each of the
Registration Statement, the Prospectus and the Disclosure Package (as
amended or supplemented, if the Company shall have filed with the
Commission any amendment or supplement thereto) complied and will comply in
all material respects with all applicable provisions of the Securities Act
and the Securities Act Regulations; the Registration Statement, the
Preliminary Prospectus and the Prospectus, as amended and supplemented,
contain and will contain all statements of material fact with respect to
such Selling Stockholder required to be stated therein in accordance with
the Securities Act and the Securities Act Regulations; the Registration
Statement, as amended, does not and will not contain an untrue statement of
a material fact with respect to such Selling Stockholder or omit to state a
material fact with respect to such Selling Stockholder required to be
stated therein or necessary in order to make the statements therein not
misleading; and the Prospectus and the Disclosure Package, as amended and
supplemented, does not and will not contain an untrue statement of a
material fact with respect to such Selling Stockholder or omit to state a
material fact with respect to such Selling Stockholder required to be
stated therein
-17-
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) such Selling Stockholder has not distributed and will not distribute
any Free Writing Prospectus, preliminary prospectus, the Prospectus or any
other offering material in connection with the offering and sale of the
Shares; except for any such distribution to which the Representatives have
consented in advance; and such Selling Stockholder has not taken, directly
or indirectly, any action intended, or which might reasonably be expected,
to cause or result in, under the Securities Act, the Securities Act
Regulations or otherwise, or which has constituted, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares;
(i) certificates in negotiable form for the Shares to be sold hereunder by
such Selling Stockholder have been or will be delivered to the Transfer
Agent with the Letter of Instruction;
(j) such Selling Stockholder has not relied upon the Representatives or
legal counsel for the Representatives for any legal, tax or accounting
advice in connection with the offering and sale of the Shares to be sold by
it;
(k) such Selling Stockholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by
the Company under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as are described in
both the Prospectus and the Disclosure Package under "Shares Eligible for
Future Sale";
(l) such Selling Stockholder does not have, or has waived prior to the date
hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by
the Company or any of the other Selling Stockholders to the Underwriters
pursuant to this Agreement; and such Selling Stockholder does not own any
warrants, options or similar rights to acquire, and does not have any right
or arrangement to acquire, any capital stock, right, warrants, options or
other securities from the Company, other than those described in the
Registration Statement, the Prospectus and the Disclosure Package; and
(m) except for the investment of the Selling Stockholders and/or their
affiliates in optionsXpress Holdings, Inc. and Liquidnet, Inc. and as
otherwise disclosed to the Underwriters in writing, such Selling
Stockholder is not a member of or an affiliate of or associated with any
member of the NASD (within the meaning of Article 1 of the By-Laws and the
applicable rules of the NASD).
5. Certain Covenants by the Company:
The Company hereby agrees with each Underwriter:
-18-
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions (both domestic and
foreign) as the Representatives may designate and to maintain such
qualifications in effect as long as requested by the Representatives for
the distribution of the Shares, provided that the Company shall not be
required to qualify as a foreign corporation, to subject itself to taxation
or to consent to the service of process under the laws of any such
jurisdiction (except service of process with respect to the offering and
sale of the Shares);
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to
be declared effective before the offering of the Shares may commence, the
Company will endeavor to cause such post-effective amendment to become
effective as soon as reasonably practicable and will advise the
Representatives promptly and, if requested by the Representatives, will
confirm such advice in writing, when such post-effective amendment has
become effective;
(c) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act not later than 12:00 noon (New York City time), on the
business day following the execution and delivery of this Agreement or on
such other day as the parties may mutually agree and to furnish promptly
(and with respect to the initial delivery of such Prospectus, not later
than 12:00 noon (New York City time) on the second business day following
the execution and delivery of this Agreement, or on such other day as the
parties may mutually agree, to the Underwriters copies of the Prospectus
(or of the Prospectus as amended or supplemented if the Company shall have
made any amendments or supplements thereto after the effective date of the
Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
versions created to be transmitted to the Commission for filing via XXXXX,
except to the extent permitted by Regulation S-T and Rule 424 of the
Securities Act Regulations;
(d) to furnish a copy of each proposed Free Writing Prospectus to the
Representatives and counsel for the Underwriters and obtain the consent of
the Representatives prior to referring to, using or filing with the
Commission any Free Writing Prospectus pursuant to Rule 433(d) under the
Securities Act, other than the Issuer Free Writing Prospectuses, if any,
identified in Schedule III hereto;
(e) to comply with the requirements of Rules 164 and 433 of the Securities
Act Regulations applicable to any Issuer Free Writing Prospectus, including
timely filing with the Commission, legending and record keeping, as
applicable;
(f) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective
-19-
and when any post-effective amendment thereto becomes effective under the
Securities Act Regulations;
(g) to advise the Representatives immediately, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement, the
Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus, or for additional information with respect thereto, (ii) the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any order preventing or suspending the
use of the Preliminary Prospectus, the Prospectus or any Issuer Free
Writing Prospectus, or of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes and, if the
Commission or any other government agency or authority should issue any
such order, to make every reasonable effort to obtain the lifting or
removal of such order as soon as possible, (iii) any examination pursuant
to Section 8(e) of the Securities Act concerning the Registration
Statement, or (iv) if the Company becomes subject to a proceeding under
Section 8A of the Securities Act in connection with the public offering of
Shares contemplated herein; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement, the Prospectus
or the Disclosure Package and to file no such amendment or supplement to
which the Representatives shall reasonably object;
(h) to furnish to the Underwriters for a period of three years from the
date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders
of shares of Common Stock, (ii) as soon as practicable after the filing
thereof, copies of all reports filed by the Company with the Commission,
the Nasdaq National Market or any securities exchange and (iii) such other
non-confidential information concerning the business and financial
condition of the Company as the Underwriters may reasonably request
regarding the Company and the Subsidiaries; provided that the Company shall
not be required to furnish reports, communications or information that are
otherwise available on XXXXX or other publicly available electronic means;
(i) to advise the Underwriters promptly of the happening of any event or
development known to the Company within the time during which a Prospectus
relating to the Shares(or in lieu thereof the notice referred to in Rule
173(a) under the Securities Act Regulations) is required to be delivered
under the Securities Act Regulations which, in the judgment of the Company
or in the reasonable opinion of the Representatives or counsel for the
Underwriters, (i) would require the making of any change in the Prospectus
or the Disclosure Package so that the Prospectus or the Disclosure Package
would not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, (ii) as a result of which any Issuer Free Writing
Prospectus conflicted or would conflict with the information contained in
the Registration Statement relating to the Shares, or (iii) if it is
necessary at
-20-
any time to amend or supplement the Prospectus or the Disclosure Package to
comply with any law and, during such time, to promptly prepare and furnish
to the Underwriters copies of the proposed amendment or supplement before
filing any such amendment or supplement with the Commission and thereafter
promptly furnish at the Company's own expense to the Underwriters and to
dealers, copies in such quantities and at such locations as the
Representatives may from time to time reasonably request of an appropriate
amendment or supplement to the Prospectus or the Disclosure Package so that
the Prospectus or the Disclosure Package as so amended or supplemented will
not, in the light of the circumstances when it (or in lieu thereof the
notice referred to in Rule 173(a) under the Securities Act Regulations) is
so delivered, be misleading or, in the case of any Issuer Free Writing
Prospectus, conflict with the information contained in the Registration
Statement, or so that the Prospectus or the Disclosure Package will comply
with the law;
(j) to file promptly with the Commission any amendment or supplement to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus that may, in the judgment of the Company or
in the reasonable opinion of the Representatives, be required by the
Securities Act or requested by the Commission;
(k) prior to filing with the Commission any amendment or supplement to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and not to file any
amendment to the Registration Statement or the Prospectus or any supplement
to the Prospectus to which the Representatives reasonably object in
writing;
(l) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith
or incorporated by reference therein);
(m) to apply the net proceeds of the sale of the Shares in accordance with
its statements under the caption "Use of Proceeds" in the Prospectus and
the Disclosure Package and in a manner such that the Company will not
become an "investment company" as that term is defined in the Investment
Company Act;
(n) to make generally available to its security holders and to the
Representatives as soon as practicable, but in any event not later than the
end of the fiscal quarter first occurring after the first anniversary of
the effective date of the Registration Statement an earnings statement
complying with the provisions of Section 11(a) of the Securities Act (in
form, at the option of the Company, complying with the provisions of Rule
158 of the Securities Act Regulations) covering a period of 12 months
beginning after the effective date of the Registration Statement;
(o) to use its best efforts to maintain the listing of the Shares on the
Nasdaq National Market and to file with the Nasdaq National Market all
documents and notices required
-21-
thereby of companies that have securities for which quotations are reported
by the Nasdaq National Market;
(p) to maintain, at its expense, a registrar and transfer agent for the
Shares;
(q) except with respect to the Shares to be sold hereunder, during the
period commencing on the date hereof and ending on the 90-day anniversary
of the date of the Prospectus, (1) not to offer, pledge, sell, contract to
sell, sell any option or contract to purchase, not to purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock (whether such shares or any
such securities are now owned by the undersigned or are hereafter
acquired), or (2) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise; provided, however, that
notwithstanding the foregoing, the Company shall be permitted to grant
options to purchase Common Stock or issue shares of restricted stock or
other equity-based awards pursuant to the Company's benefit and equity
incentive plans described in the Registration Statement, and may issue
shares of Common Stock upon the exercise of outstanding options, provided
that in the event any holder of such shares would become a 1% or greater
stockholder as a result of such issuance, the Company shall cause such
holder to furnish the Representatives a letter substantially similar to
Exhibit A hereto;
(r) not to, and to use its best efforts to cause its officers, directors
and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement,
any action designed to stabilize or manipulate the price of any security of
the Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the
sale or resale of any of the Shares, (ii) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of the Shares or (iii) pay
or agree to pay to any person any compensation for soliciting any order to
purchase any other securities of the Company;
(s) to cause each Selling Stockholder, executive officer and director of
the Company to furnish to the Representatives, prior to the Initial Sale
Time, a letter or letters, substantially in the form of Exhibit A hereto;
6. Certain Covenants by each Selling Stockholder:
Each Selling Stockholder hereby agrees with each Underwriter:
(a) to deliver to the Representatives prior to the Closing Time a properly
completed and executed United States Treasury Department Form W-8 (if the
Selling Stockholder is
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a non-United States person, within the meaning of the Code) or Form W-9 (if
the Selling Stockholder is a United States person, within the meaning of
the Code);
(b) to furnish to the Representatives, prior to the Initial Sale Time, a
letter or letters, substantially in the form of Exhibit A hereto;
(c) if, at any time prior to the date on which the distribution of the
Shares as contemplated herein and in the Prospectus and the Disclosure
Package has been completed, as determined by the Representatives, any
information provided by or on behalf of such Selling Stockholder to the
Company or the Underwriters becomes incorrect, such Selling Stockholder
will promptly notify the Company and the Representatives so that the
Company may, if necessary, prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to
the Representatives) that will correct such information; and
(d) such Selling Stockholder agrees to deliver to the Company or the
Underwriters such documentation as the Company or the Underwriters or any
of their respective counsel may reasonably request in order to effectuate
any of the provisions of this Agreement; and
(e) to not prepare or have prepared on its behalf or use or refer to any
Free Writing Prospectus in connection with the offer or sale of the Shares.
7. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any
amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including costs
of mailing and shipment), (ii) the preparation, issuance and delivery of
the certificates for the Shares to the Underwriters, including any stock or
other transfer taxes or duties payable upon the sale of the Shares to the
Underwriters, (iii) the printing of this Agreement and any dealer
agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification
of the Shares for offering and sale under state and foreign laws that the
Company and the Representatives have mutually agreed are appropriate and
the determination of their eligibility for investment under such laws as
aforesaid, including the legal fees and filing fees and other disbursements
of counsel for the Underwriters assuming that the Common Stock is approved
for listing on the Nasdaq National Market, and the printing and furnishing
of copies of any blue sky or foreign securities law surveys or legal
investment surveys to the Underwriters and to dealers; (v) filing for
review of the public offering of the Shares by the NASD (including the
filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) the fees and expenses of any transfer agent or
registrar for the Shares and
-23-
miscellaneous expenses referred to in the Registration Statement, (vii) the
fees and expenses incurred in connection with the inclusion of the Shares
for listing on the Nasdaq National Market, (viii) the cost and expenses of
making road show presentations with respect to the offering of the Shares
(but excluding the costs and expenses of travel and accommodations for the
Underwriters); and (ix) the performance of the Company's other obligations
hereunder. Upon the request of the Representatives, the Company will
provide funds in advance for filing fees.
(b) If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement
to be fulfilled by it, or if for any reason the Company shall be unable to
perform its obligations under this Agreement, the Company also shall
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket
expenses (such as printing, facsimile, courier service, direct computer
expenses, accommodations, travel and the fees and disbursements of
Underwriters' counsel and any other advisors, accountants, appraisers,
etc.) reasonably incurred by such Underwriters in connection with this
Agreement or the transactions contemplated herein.
8. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Option Closing Time, as applicable, are subject to
the accuracy of the representations and warranties on the part of the
Company hereunder on the date hereof and at the Closing Time and on each
Option Closing Time, as applicable, the performance by the Company of its
obligations hereunder and the satisfaction of the following further
conditions at the Closing Time or on each Option Closing Time, as
applicable:
(b) The Company shall furnish to the Underwriters at the Closing Time and
on each Option Closing Time an opinion of X. Xxxx Wax, General Counsel for
the Company and the Subsidiaries, addressed to the Underwriters and dated
the Closing Time and each Option Closing Time and in form and substance
reasonably satisfactory to Lord, Bissell & Brook LLP, counsel for the
Underwriters, in substantially the form attached.
(c) The Company shall furnish to the Underwriters at the Closing Time and
on each Option Closing Time an opinion of Xxxxxxxx & Xxxxx LLP, counsel for
the Company and the Subsidiaries, addressed to the Underwriters and dated
the Closing Time and each Option Closing Time and in form and substance
reasonably satisfactory to Lord, Bissell & Brook LLP, counsel for the
Underwriters, in substantially the form attached.
(d) Each Selling Stockholder shall furnish to the Underwriters at the
Closing Time and on each Option Closing Time an opinion of counsel for the
Selling Stockholders reasonably satisfactory to the Underwriters, addressed
to the Underwriters and dated the Option Closing Time of the Shares, in
form and substance satisfactory to Lord, Bissell & Brook LLP, counsel for
the Underwriters, in substantially the form attached.
-24-
(e) On the date of this Agreement and at the Closing Time and each Option
Closing Time (if applicable), the Representatives shall have received from
KPMG LLP letters dated the respective dates of delivery thereof and
addressed to the Representatives, in form and substance satisfactory to the
Representatives, containing statements and information of the type
specified in AU Section 634 "Letters for Underwriters and Certain other
Requesting Parties" issued by the American Institute of Certified Public
Accountants with respect to the financial statements, including any pro
forma financial statements, and certain financial information of the
Company and the Subsidiaries included in the Registration Statement, the
Prospectus and the Disclosure Package, and such other matters customarily
covered by comfort letters issued in connection with registered public
offerings; provided, that the letters delivered at the Closing Time and
each Option Closing Time (if applicable) shall use a "cut-off" date no more
than three business days prior to such Closing Time or such Option Closing
Time, as the case may be.
In the event that the letters referred to above set forth any change
in the capital stock, increase in long-term debt or any decreases in
stockholders' equity, operating income or net income of the Company, it
shall be a further condition to the obligations of the Underwriters that
(A) such letters shall be accompanied by a written explanation of the
Company as to the significance thereof, unless the Representatives deem
such explanation unnecessary, and (B) such changes, decreases or increases
do not, in the sole judgment of the Representatives, make it impractical or
inadvisable to proceed with the purchase and delivery of the Shares as
contemplated by the Registration Statement.
(f) The Representatives shall have received at the Closing Time and on each
Option Closing Time the favorable opinion of Lord, Bissell & Brook LLP,
dated the Closing Time or such Option Closing Time, addressed to the
Representatives and in form and substance satisfactory to the
Representatives.
(g) No amendment or supplement to the Registration Statement, the
Prospectus or any document in the Disclosure Package shall have been filed
to which the Underwriters shall have objected in writing prior to its
filing unless such objection has been withdrawn.
(h) Prior to the Closing Time and each Option Closing Time (i) no stop
order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Prospectus or any document in
the Disclosure Package shall have been issued, and no proceedings for such
purpose shall have been initiated or threatened, by the Commission, and no
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or threatening of any proceedings for any
of such purposes, has occurred; (ii) the Company shall have responded to
all comments of the Commission to the Registration Statement to the
reasonable satisfaction of the Representatives; (iii) the Registration
Statement or any amendment thereto, in each case as of their respective
effective dates, shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (iv) the Prospectus and
the Disclosure
-25-
Package, and any amendment or supplement thereto, as of the applicable
filing dates and at the Closing Time and each Option Closing Time, shall
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(i) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(j) Between the time of execution of this Agreement and the Closing Time or
the relevant Option Closing Time, there shall not have been any Material
Adverse Change and no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or any of the
Subsidiaries, in each case, which in the Representatives' sole judgment,
makes it impracticable or inadvisable to proceed with the public offering
of the Shares as contemplated by the Registration Statement.
(k) The Shares shall have been approved for inclusion in the Nasdaq
National Market.
(l) The NASD shall have confirmed in writing that it has decided to raise
no objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements and shall not have raised any such
objection after the date of such confirmation.
(m) The Representatives shall have received lock-up agreements from each
Selling Stockholder, executive officer and director, in the form of Exhibit
A attached hereto, and such letter agreements shall be in full force and
effect.
(n) The Company will, at the Closing Time and on each Option Closing Time,
deliver to the Underwriters a certificate of its Chief Executive Officer
and Chief Financial Officer to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date
of such certificate, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the date of such
certificate; and
(ii) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto has been issued
and no proceedings for that purpose have been instituted or are
pending or threatened under the Securities Act; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement, the Prospectus and the
Disclosure Package, there has not been any change in the capital
stock or increase in the outstanding
-26-
indebtedness of the Company or any Subsidiary that is material to
the Company and the Subsidiaries considered as one enterprise.
(o) Each Selling Stockholder will, at the Closing Time and on each Option
Closing Time, deliver to the Underwriters a certificate, to the effect
that:
(i) the representations and warranties of such Selling Stockholder
set forth in this Agreement are true and correct as of such date;
and
(ii) such Selling Stockholder has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the date hereof.
(p) The Company and the Selling Stockholders, as applicable, shall have
furnished to the Underwriters such other documents and certificates as to
the accuracy and completeness of any statement in the Registration
Statement, the Prospectus and the Disclosure Package, the representations,
warranties and statements of the Company contained herein, the performance
by the Company and the Selling Stockholders of their respective covenants
contained herein, and the fulfillment of any conditions contained herein,
as of the Closing Time or any Option Closing Time, as the Underwriters may
reasonably request.
9. Termination:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any
time prior to the Closing Time or any Option Closing Time, (i) if any of
the conditions specified in Section 8 shall not have been fulfilled when
and as required by this Agreement to be fulfilled, or (ii) if there has
been since the respective dates as of which information is given in the
Registration Statement, the Prospectus or the Disclosure Package, any (A)
Material Adverse Change, (B) development involving a prospective Material
Adverse Change other than as set forth or contemplated in the Preliminary
Prospectus and the Prospectus, the effect of which is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to
market the Shares or enforce contracts for the sale of the Shares, or (C)
material change in management of the Company or any Subsidiary, whether or
not arising in the ordinary course of business, or (iii) if there has
occurred any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the United States financial markets is
such as to make it, in the judgment of the Representatives, impracticable
to market the Shares or enforce contracts for the sale of the Shares, or
(iv) if trading in any securities of the Company has been suspended by the
Commission or by the Nasdaq National Market, or if trading generally on the
New York Stock Exchange or in the Nasdaq over-the-counter market has been
suspended (including an automatic halt in trading pursuant to
market-decline triggers, other than those in which solely program trading
is temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or
maximum
-27-
ranges for prices for securities have been required, by such exchange or
the NASD or the over-the-counter market or by order of the Commission or
any other governmental authority, or (v) if there has been any downgrade in
the ratings of the Company or its Subsidiaries by A.M. Best Company, or
(vi) any federal or state statute, regulation, rule or order of any court
or other governmental authority has been enacted, published, decreed or
otherwise promulgated which, in the reasonable opinion of the
Representatives, materially adversely affects or will materially adversely
affect the business or operations of the Company.
If the Representatives elect to terminate this Agreement as provided
in this Section 9, the Company and the Underwriters shall be notified
promptly by telephone, promptly confirmed by facsimile or e-mail.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company
shall be unable to comply in all material respects with any of the terms of
this Agreement, the Company shall not be under any obligation or liability
under this Agreement (except to the extent provided in Sections 7 and 11
hereof) and the Underwriters shall be under no obligation or liability to
the Company under this Agreement (except to the extent provided in Section
11 hereof) or to one another hereunder.
10. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a Option
Closing Time in its obligation to take up and pay for the Shares to be
purchased by it under this Agreement on such date, the Representatives
shall have the right, within 36 hours after such default, to make
arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Shares
which such Underwriter shall have agreed but failed to take up and pay for
(the "Defaulted Shares"). Absent the completion of such arrangements within
such 36-hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased on such date, each
non-defaulting Underwriter shall take up and pay for (in addition to the
number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares
agreed to be purchased by the defaulting Underwriter on such date in the
proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii) if
the total number of Defaulted Shares exceeds 10% of such total, the
Representatives may terminate this Agreement by notice to the Company,
without liability of any party (other than any defaulting underwriter) to
any other party except that the provisions of Sections 7 and 11 hereof
shall at all times be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it
will not sell any Shares hereunder on such date unless all of the Shares to
be purchased on such date are
-28-
purchased on such date by the Underwriters (or by substituted Underwriters
selected by the Representatives with the approval of the Company or
selected by the Company with the approval of the Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing
Time or the relevant Option Closing Time for a period not exceeding five
business days in order that any necessary changes in the Registration
Statement and Prospectus and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 10 with the same
effect as if such substituted Underwriter had originally been named in this
Agreement.
11. Indemnity and Contribution by the Company, the Selling Stockholders and the
Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, and
the respective directors, officers, employees and agents of each
Underwriter from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A) any
failure on the part of the Company to comply with any applicable law, rule
or regulation relating to the offering of securities being made pursuant to
the Prospectus, (B) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment or
part thereof), any Issuer Free Writing Prospectus that the Company has
filed or was required to file with the Commission, or the Prospectus (the
term Prospectus for the purpose of this Section 11 being deemed to include
the Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), (C) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction (domestic or foreign) in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the NASD or the Nasdaq
Stock Market (each an "Application"), (D) any omission or alleged omission
to state a material fact required to be stated in any such Registration
Statement or necessary to make the statements made therein not misleading,
or (E) any omission or alleged omission from any such Issuer Free Writing
Prospectus, Prospectus or any Application of a material fact necessary to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading; except insofar as any such loss,
expense, liability, damage or claim arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in and in conformity with information
furnished in writing by the Underwriters through the Representatives to the
-29-
Company expressly for use in such Registration Statement, Prospectus or
Application. The indemnity agreement set forth in this Section 11(a) shall
be in addition to any liability which the Company may otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to
subsection (a) above, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the
Company will not relieve the Company of any obligation hereunder, except to
the extent that its ability to defend is actually impaired by such failure
or delay. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel to have charge of
the defense of such action within a reasonable time after notice of the
institution of such action is given by the Underwriter or controlling
person or such indemnified party or parties shall have reasonably concluded
(based on the advice of counsel) that there may be defenses available to it
or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the Company
and paid as incurred (it being understood, however, that the Company shall
not be liable for the expenses of more than one separate firm of attorneys
for the Underwriters or controlling persons in any one action or series of
related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to
such action). Anything in this paragraph to the contrary notwithstanding,
the Company shall not be liable for any settlement of any such claim or
action effected without its consent.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify, defend and hold harmless each Underwriter and any person who
controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the respective directors,
officers, employees and agents of each Underwriter from and against any
loss, expense, liability, damage or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises
out of or is based upon (A) any failure on the part of such Selling
Stockholder to comply with any applicable law, rule or regulation relating
to the offering of securities being made pursuant to the Prospectus, (B)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or part thereof),
any Issuer Free Writing Prospectus that the Company has filed or was
required to file with the Commission, or the Prospectus, or any
Application, (C) any omission or alleged omission to state a material fact
required to be stated in such Registration Statement, or necessary to make
the
-30-
statements made therein not misleading, or (D) any omission or alleged
omission from any such Issuer Free Writing Prospectus, Prospectus or any
Application of a material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading; except insofar as any such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in
and in conformity with information furnished in writing by such Selling
Stockholder to the Company expressly for use in such Registration
Statement, Issuer Free Writing Prospectus, or Prospectus in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, any Issuer Free Writing Prospectus or the
Prospectus in reliance upon and in conformity with information furnished to
the Company by or on behalf of such Selling Stockholder expressly for use
therein; provided, however, that the indemnity agreement contained in this
subsection (b) shall not require any such Selling Stockholder to reimburse
the Underwriters for an amount in excess of the net proceeds from the
Shares sold by such Selling Stockholder pursuant to this Agreement. The
information with respect to such Selling Stockholder in the Registration
Statement and the Prospectus under the caption "Principal Stockholders and
Selling Stockholders" constitutes the only information furnished by or on
behalf of such Selling Stockholder for the purposes of this Agreement. The
indemnity agreement set forth in this Section 11(b) shall be in addition to
any liabilities that the Selling Stockholders may otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company or any
Selling Stockholder pursuant to subsection (a) or the first paragraph of
this subsection (b) above, such Underwriter shall promptly notify the
Company and/or such Selling Stockholder, as applicable, in writing of the
institution of such action, and the Company (jointly if desired) or such
Selling Stockholder (jointly if desired), as applicable, shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the
Company or such Selling Stockholder, as applicable, will not relieve the
Company or such Selling Stockholder, as applicable, of any obligation
hereunder, except to the extent that its ability to defend is actually
impaired by such failure or delay. Such Underwriter or controlling person
shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless the employment of such
counsel shall have been authorized in writing by the Company or such
Selling Stockholder, as applicable, in connection with the defense of such
action, or the Company or such Selling Stockholder, as applicable, shall
not have employed counsel to have charge of the defense of such action
within a reasonable time or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to
those available to the Company or such Selling Stockholder, as applicable,
(in which case neither the Company nor such Selling Stockholder shall have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be
borne by the Company or the Selling
-31-
Stockholder, as applicable, and paid as incurred (it being understood,
however, that neither the Company nor any Selling Stockholder shall be
liable for the expenses of more than one separate firm of attorneys for the
Underwriters or controlling persons in any one action or series of related
actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding,
neither the Company nor any Selling Stockholder shall be liable for any
settlement of any such claim or action effected without its consent.
(c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the
Company's officers that signed the Registration Statement, and any person
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
which the Company, the Selling Stockholder or any such person may incur
under the Securities Act, the Exchange Act or otherwise, but only insofar
as such loss, expense, liability, damage or claim arises out of or is based
upon (A) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or part
thereof), any Issuer Free Writing Prospectus that the Company has filed or
was required to file with the Commission, or the Prospectus, or any
Application, (B) any omission or alleged omission to state a material fact
required to be stated in any such Registration Statement, or necessary to
make the statements made therein not misleading, or (C) any omission or
alleged omission from any such Issuer Free Writing Prospectus, Prospectus
or any Application of a material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only insofar as such untrue statement or
alleged untrue statement or omission or alleged omission was made in such
Registration Statement, Issuer Free Writing Prospectus, Prospectus or
Application in reliance upon and in conformity with information furnished
in writing by the Underwriters through the Representatives to the Company
expressly for use therein. The concession and reallowance figures appearing
in the fourth paragraph under the section entitled "Underwriting" and the
statements set forth in the seventh, tenth, eleventh and twelfth paragraphs
thereunder in the Preliminary Prospectus and the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by or on behalf of any Underwriter through the Representatives to
the Company for purposes of Section 3(n) and Section 3(p) and this Section
11. The indemnity agreement set forth in this Section 11(c) shall be in
addition to any liabilities that such Underwriters may otherwise have.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant
to the foregoing paragraph, the Company or such person shall promptly
notify the Representatives in writing of the institution of such action and
the Representatives, on behalf of the Underwriters, shall assume the
defense of such action, including the employment of counsel and payment of
expenses. The Company or such person shall have the right to
-32-
employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Company or such person unless the
employment of such counsel shall have been authorized in writing by the
Representatives in connection with the defense of such action or the
Representatives shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of the
institution of such action is given by the Company or such indemnified
party or parties shall have reasonably concluded (based on the advice of
counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in
which case the Representatives shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate
firm of attorneys in any one action or series of related actions in the
same jurisdiction (other than local counsel in any such jurisdiction)
representing the indemnified parties who are parties to such action).
Anything in this paragraph to the contrary notwithstanding, no Underwriter
shall be liable for any settlement of any such claim or action effected
without the written consent of the Representatives.
(d) If the indemnification provided for in this Section 11 is unavailable
or insufficient to hold harmless an indemnified party under subsections
(a), (b) and (c) of this Section 11 in respect of any losses, expenses,
liabilities, damages or claims referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Underwriters from the offering of the Shares or (ii) if
(but only if) the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company and of the Underwriters in connection with the
statements or omissions which resulted in such losses, expenses,
liabilities, damages or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Company and of the Underwriters shall be determined
by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
relates to information supplied by the Company or by the Underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
-33-
(e) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in subsection (d)(i)
and, if applicable (ii), above. Notwithstanding the provisions of this
Section 11, no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the
Shares purchased by such Underwriter pursuant to this Agreement. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in
proportion to their respective underwriting commitments and not joint.
12. Survival:
The indemnity and contribution agreements contained in Section 11 and
the covenants, warranties and representations of the Company and the
Selling Stockholders contained in Sections 3, 4, 5 6 and 7 of this
Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, or any person who
controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, and the respective directors,
officers, employees and agents of each Underwriter or by or on behalf of
the Company, its directors and officers, the Selling Stockholders or any
person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and shall survive any
termination of this Agreement or the sale and delivery of the Shares. The
Company, each Selling Stockholder and each Underwriter agree promptly to
notify the others of the commencement of any litigation or proceeding
against it and, in the case of the Company, against any of the Company's
officers and directors, in connection with the sale and delivery of the
Shares, or in connection with the Registration Statement or Prospectus.
13. Duties:
Nothing in this Agreement shall be deemed to create a partnership,
joint venture or agency relationship between the parties. The Underwriters
undertake to perform such duties and obligations only as expressly set
forth herein. Such duties and obligations of the Underwriters with respect
to the Shares shall be determined solely by the express provisions of this
Agreement, and the Underwriters shall not be liable except for the
performance of such duties and obligations (or failure to perform such
duties or obligations) with respect to the Shares as are specifically set
forth in this Agreements. Each of the Company and the Selling Stockholders
acknowledges and agrees that: (i) the purchase and sale of the Shares
pursuant to this Agreement, including the determination of the public
offering price of the Shares and any related discounts and commissions, is
an arm's-length commercial transaction between the Company and the Selling
Stockholders, on the one hand, and the several Underwriters, on the other
hand, and the Company and the Selling Stockholders are capable of
evaluating and understanding and
-34-
understand and accept the terms, risks and conditions of the transactions
contemplated by this Agreement; (ii) in connection with each transaction
contemplated hereby and the process leading to such transaction each
Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company, the Selling
Stockholders or their respective affiliates, stockholders, creditors or
employees or any other party; (iii) no Underwriter has assumed or will
assume an advisory, agency or fiduciary responsibility in favor of the
Company or the Selling Stockholders with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether
such Underwriter has advised or is currently advising the Company or the
Selling Stockholders on other matters); and (iv) the several Underwriters
and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ form those of the Company
and the Selling Stockholders and that the several Underwriters have no
obligation to disclose any of such interests. The Company and each Selling
Stockholder acknowledges that the Underwriters disclaim any implied duties
(including any fiduciary duty), covenants or obligations arising from the
Underwriters' performance of the duties and obligations expressly set forth
herein. The Company and the Selling Stockholders hereby waive and release,
to the fullest extent permitted by law, any claims that the Company and the
Selling Stockholders may have against the several Underwriters with respect
to any breach or alleged breach of agency or fiduciary duty.
14. Notices:
Except as otherwise provided herein, all statements, requests, notices
and agreements shall be in writing and, if to the Underwriters, shall be
delivered or sent by mail or facsimile transmission in care of Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000, Attention: Syndicate Department; facsimile number 000-000-0000; if
to the Company, shall be delivered or sent by mail or facsimile
transmission to the offices of the Company at 0000 0xx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000; Attention: Xxxx X. Xxxxxxxxxxx; facsimile number
000-000-0000; and if to the Selling Stockholders, shall be delivered or
sent by mail or facsimile to the offices of Summit Partners at 000 Xxxxxxxx
Xxxxxx, Xxxx Xxxx, XX 00000; Attention: Xxxxx X. Xxxxx; facsimile number
000-000-0000.
15. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
16. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company and the controlling persons,
directors and officers referred to in Sections 11 and 12 hereof, and their
respective successors, assigns, executors and
-35-
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters)
shall acquire or have any right under or by virtue of this Agreement.
17. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all
purposes.
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided
below, whereupon this Agreement shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
SEABRIGHT INSURANCE HOLDINGS, INC.
By:
------------------------------------
Name:
Title:
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
Its: General Partner
By: Summit Partners, LLC
Its: General Partner
By:
------------------------------------
Name:
SUMMIT V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
Its: General Partner
By: Summit Partners, LLC
Its: General Partner
By:
------------------------------------
Name:
[Signatures continued on following page]
-36-
[Signatures continued from preceding page]
SUMMIT V ADVISORS FUND (QP), L.P.
By: Summit Partners V, L.P.
Its: General Partner
By: Summit Partners, LLC
Its: General Partner
By:
------------------------------------
Name:
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
Its: General Partner
By: Summit Partners, LLC
Its: General Partner
By:
------------------------------------
Name:
SUMMIT VENTURES VI-A, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By:
------------------------------------
Name:
[Signatures continued on following page]
-37-
[Signatures continued from preceding page]
SUMMIT VENTURES VI-B, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By:
------------------------------------
Name:
SUMMIT VI ADVISORS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By:
------------------------------------
Name:
SUMMIT VI, ENTREPRENEURS FUND, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By:
------------------------------------
Name:
[Signatures continued on following page]
-38-
[Signatures continued from preceding page]
SUMMIT INVESTORS VI, L.P.
By: Summit Partners VI (GP), L.P.
Its: General Partner
By: Summit Partners VI (GP), LLC
Its: General Partner
By:
------------------------------------
Name:
[Signatures continued on following page]
-39-
[Signatures continued from the preceding page]
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXXX & CO.
XXXXX, XXXXXXXX & XXXXX, INC.
XXXXXXX, XXXXXXX & CO.
As Representatives of the other
Underwriters named on Schedule II hereto.
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-40-
SCHEDULE I
Maximum Number of
Number of Initial Option Shares to
Name of Party Selling Shares Shares to be Sold be Sold
---------------------------- ----------------- -----------------
SeaBright Insurance Holdings, Inc. 3,400,000 510,000
Summit Ventures V, L.P. 797,100 119,565
Summit V Companion Fund, L.P. 133,284 19,993
Summit V Advisors Fund (QP), L.P. 53,316 7,997
Summit V Advisors Fund, L.P. 16,296 2,444
Summit Ventures VI-A, L.P. 1,352,754 202,913
Summit Ventures VI-B, L.P. 564,156 84,623
Summit VI Advisors Fund, L.P. 28,134 4,220
Summit VI Entrepreneurs Fund, L.P. 43,194 6,479
Summit Investors VI, L.P. 11,766 1,765
--------- -------
Total 6,400,000 960,000
========= =======
-1-
SCHEDULE II
Number of Initial Maximum Number of
Shares to be Option Shares to
Underwriter Purchased be Purchased
----------- ----------------- -----------------
FRIEDMAN, BILLINGS, XXXXXX & CO.,
INC.
XXXXX XXXXXXX & CO.
XXXXX, XXXXXXXX & XXXXX, INC.
XXXXXXX, XXXXXXX & CO.
--------- -------
Total 6,400,000 960,000
========= =======
-1-
SCHEDULE III
ISSUER FREE WRITING PROSPECTUSES
None
-1-
EXHIBIT A
FORM OF LOCK-UP LETTER
January __, 2006
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXX XXXXXXX & CO.
XXXXX, XXXXXXXX & XXXXX, INC.
XXXXXXX, XXXXXXX & CO.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned understands that Friedman, Billings, Xxxxxx & Co.,
Inc., Xxxxx Xxxxxxx & Co., Xxxxx, Xxxxxxxx & Xxxxx, Inc. and Xxxxxxx,
Xxxxxxx & Co. (the "Representatives") propose to enter into an Underwriting
Agreement (the "Underwriting Agreement"), as Representatives of several
underwriters (the "Underwriters"), with SeaBright Insurance Holdings, Inc.,
a Delaware corporation (the "Company"), providing for the public offering
(the "Public Offering") by the Underwriters of shares (the "Shares") of
Common Stock of the Company (the "Common Stock").
To induce the Underwriters to continue their efforts in connection
with the Public Offering, the undersigned hereby irrevocably agrees that,
without the prior written consent of the Representatives, it will not,
during the period commencing on the date hereof and ending on the 90-day
anniversary of the date of the final prospectus relating to the Public
Offering (the "Prospectus"), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for any shares
of Common Stock (whether such shares or any such securities are now owned
by the undersigned or are hereafter acquired), or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise,
excluding any Shares to be sold under the Underwriting Agreement. In
addition, the undersigned agrees that, without prior written consent of the
Representatives, it will not, during the period commencing on the date
hereof and ending on the 90-day anniversary of the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
1
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound in writing by the restrictions
set forth herein, (ii) to any trust, partnership, corporation or other
entity formed for the direct or indirect benefit of the transferor or the
immediate family of the transferor, provided that a duly authorized
officer, representative or trustee of the transferee agrees in writing to
be bound by the restrictions set forth herein, and provided further that
any such transfer shall not involve a disposition for value, (iii) if the
transfer occurs by operation of law, such as rules of descent and
distribution, statutes governing the effects of a merger or a qualified
domestic order, provided that the transferee executes an agreement
acknowledging that the transferee is receiving and holding the shares
subject to the provisions hereof, (iv) to an affiliate (as that term is
defined in Rule 405 under the Securities Act) of the undersigned, provided
that such affiliate agrees to be bound in writing by the restrictions set
forth herein, or (v) with the prior written consent of Friedman, Billings,
Xxxxxx & Co., Inc. on behalf of the Underwriters. For purposes of this
Lock-Up Letter Agreement, "immediate family" shall mean any relationship by
blood, marriage or adoption, not more remote than first cousin.
In furtherance of the foregoing, the Company and its transfer agent
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Public Offering in reliance on this Lock-Up Letter
Agreement.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be
made pursuant to an Underwriting Agreement, the terms of which are subject
to agreement between the Company and the Representatives. The terms of this
Lock-Up Letter Agreement shall expire in the event the Public Offering of
the firm Shares is not consummated on or before March 1, 2006.
If (A) the Company (i) withdraws the registration statement
registering the Shares (the "Registration Statement") or (ii) deregisters
all of the Shares covered by the Registration Statement or (B) the
Underwriting Agreement is executed but is terminated by the Representatives
prior to payment for and delivery of any of the Shares, the undersigned
will be released from the undersigned's obligations under this Lock-Up
Letter Agreement.
2
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Letter Agreement
and that, upon request, the undersigned will execute any additional
documents reasonably necessary in connection with the enforcement hereof.
Any obligations of the undersigned shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Very truly yours,
Dated:
------------------------------
----------------------------------------
(Signature)
----------------------------------------
(Printed or Typed Name)
3
